Jan. 31, 2007
When Credit Cards Are Compromised
How to Detect and Protect Your Personal Information And Credit
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Play CBS Video Video Fixing Your Credit Card Bill Anyone who uses credit or debit charges should be concerned about identity theft. Financial adviser Ray Martin tells Harry Smith how to get unauthorized charges taken off your bill.
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(CBS/The Early Show)
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Special Report Ray Martin's Money Tips The Early Show money maven offers advice to keep your financial house in order.
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Special Report Money Matters Get words to the wise, from the wise, on handling, making and saving money.
For customers whose drivers license numbers, name and address was stolen, TJ Maxx sent letters and established a dedicated help line that is available on their web site.
According to a recent report in the Wall Street Journal, some cases of fraudulent or unauthorized charges are already surfacing – a Massachusetts man reported about $6,700 in unauthorized transactions – including purchases from Wal-Mart Stores, Inc, Flowers.com and iTumnes.com – made with his card account number on January 2.
One thing is for sure – after the dust settles, shopping at TJ Maxx and its affiliated stores should be safer, as far as the security of customer data is concerned. As significant and unfortunate this situation is for TJ Maxx, consumers need to know that information you provide can be compromised anywhere and anytime and you need to play an active role in thwarting fraudulent account activity.
Credit Card Protections
If you are going to use plastic as your purchasing tool, credit cards are preferred over debit cards because consumers have the right, under the Fair Credit Billing Act (FCBA) to dispute incorrect charges on their credit cards. Unfortunately few consumers understand their responsibilities required to ensure the protections provided. While you can use the protections under the FCBA to help you avoid billing disputes, there are certain guidelines and timelines you need to follow.
You also need to clearly understand that none of the following procedures or protections applies to DEBIT cards. Many consumers use their debit cards like credit cards these days - debit cards even look like credit cards because they carry the MasterCard and Visa logos. Some debit card issuers do offer similar protections, however, the most complete protections under federal laws are only offered to credit card users.
Anti-credit card fanatics please take note: this does not advocate the use of credit cards to buy what cannot be paid for immediately. The best way to use a credit card is as a purchasing tool and to pay off the balance in full each month.
The following types of billing errors can be cleared up with a simple phone call instead of an official written dispute:
Clerical Errors: Mistakes such as an incorrect date or amount of a legitimate charge item can be easily changed over the phone.
Unfamiliar Charges: Over half of all disputes arise from consumers not recognizing a charge. Usually, this is because the merchant's corporate name is displayed on the bill in place of the individual store name. People looking for a charge from a particular store will be confused by an unfamiliar corporate name. For example, the charge at Brite Way Car Wash could show up as VERC ENT on a Bank America VISA card statement.
Fraudulent Charges: If a fraudulent charge does appear on your bill, companies are typically quick to address it because they want to maintain your faith in their card's security. Often they will research the transaction, and send you an affidavit stating that you sign and return stating that you did not authorize the charge.
All other billing problems or errors require you to send a written letter to your credit card company, stating that you are disputing the charges. Such errors might include:
Consumers mistakenly believe they also can automatically dispute and not pay for charges for poor-quality products they receive. Unfortunately, that's not covered under the FCBA. Goods "not delivered as agreed" are covered by the law and can be disputed for a refund. However, the law does not cover poor-quality goods. That's because poor-quality goods are not seen as an "error" on your bill. If you hope to receive a refund, you must return the product and frame your dispute as being about a product or service that wasn't delivered as agreed. This may seem like a fine line, but this is your best bet for getting your money back according to Consumer Reports and the Federal Trade Commission.
When disputing a credit card charge, you need to be sure and follow the correct process.
First, when you write the letter, DO NOT send it to the same address where you send your payments. Instead, send the letter to the address for "billing inquiries" which is typically listed on the back of the credit card statement. In your letter, include your name, address, account number and a clear description of the error. Include COPIES of documents that support your claim. Be sure to keep the originals for your own records; and also keep a copy of your dispute letter.
Send the letter by certified mail, return receipt requested.
The letter must reach the credit card issuer within 60 days after you receive the billing statement that includes the charges you are disputing.
For a sample letter and an explanation of the dispute process, refer to the FTC web site.
Once you've completed these steps, the burden lies with the credit card issuer. The company must acknowledge your complaint IN WRITING within 30 days of receiving your dispute letter. Then, the card issuer is bound to resolve the dispute within two billing cycles.
All of this sounds fairly easy, but while you are working through the process, which can potentially last up to five or six billing cycles, you are continuing to receive bills which claim that you not only owe the disputed amount, you also owe a growing finance charge on the amount.
And disputing a charge on your credit card should not affect your credit rating. First, it is within your rights to withhold payment on the disputed charge AND the finance charges during the investigation. But regular billing rules apply to all other charges and finance charges. The credit card issuer is not allowed to try and collect this money, your account cannot be closed or restricted, and the issuer cannot report you as delinquent to a credit bureau or reporting agency.
Assuming that the card issuer agrees with your dispute and finds that your bill is indeed incorrect, expect to receive a letter detailing the error and what corrections will be made to your account. The creditor must remove all finance charges, late fees or other charges related to the error.
If it turns out that your bill was correct, you will receive a letter explaining what you owe and why. You may write back saying that you refuse to pay the amount, however, the creditor can now begin the collection process - this includes reporting you to a credit bureau.
You should know the law only requires a "reasonable" investigation into the dispute, not an exhaustive one. For example, the creditor will probably not go so far as to check the store security camera footage when tracking down a disputed charge.
"The good news is that it's in a credit-card company's interest to fix most problems fast," says Consumer Reports. "It costs at least $25 to process a disputed charge but it can cost more than $200 to replace you. So it's cheaper simply to credit you for small amounts without an investigation" For larger disputes, credit-card issuers also probably weigh whether you'll take the matter to court or cut up your card.
Ray Martin
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